Posted on March 1, 2022

Why a Rising Gap Between Black and White Homeownership Will Only Keep Growing

Swapna Venugopal Ramaswamy, USA Today, February 17, 2022


The gap in the homeownership rate between Black and white families in the U.S. is bigger today than when it was legal to discriminate based on race, according to a study by the Urban Institute.

In 1960, eight years before the Fair Housing Act, which prohibits property owners, financial institutions and landlords from discriminating on the basis of race, a gap of 27 percentage points existed between white rates of homeownership (65%) and Black rates of homeownership (38%), and that gulf has widened in recent years. In 2018, 72% of white households owned a home while Black homeownership stood at 42%, a difference of 30 percentage point. In 2018, 57% of Asian and 47.5% of Hispanic American households were homeowners.

Since 2001, the Black homeownership rate has seen the most dramatic drop of any racial or ethnic group in the U.S., falling 5% compared with a 1% decline for white families and increases for Hispanic and Asian Americans.

During the housing boom of the early 2000s, Black Americans between ages 45 and 75 disproportionately held subprime mortgages, loans offered at higher interest rates to borrowers characterized as having tarnished credit histories. Many of these mortgage holders lost their homes and have been unable to return to homeownership, says Jun Zhu, a senior research associate with the Housing Finance Policy Center at the Urban Institute.


Black homeownership, which peaked in 2004 at 49% before the 2008 housing crisis, is projected to fall to 41% in 2040, according to data shared by Urban Institute, the Washington D.C.-based think tank, with USA TODAY. And that trend is significant because economists believe homeownership is an effective way to build wealth, especially for low-income households.

Decadeslong housing segregation, a systemic denial of loans or insurance in predominantly minority areas, a persistent income gap, and a historically limited ability of Black parents to leave their families an inheritance have contributed to the nation’s financial disparity, experts say.

And these trends will affect retirement prospects for Black Americans and their ability to pass down wealth to the next generation, Zhu says.


Generational wealth is not part of the Black “lifestyle,” says McGhee of Nanuet, New York.


The pandemic housing market of the past two years, which pushed prices to record highs amid record-low supplies of homes, has been hard for people looking for affordable homes. But it has been particularly difficult for Black Americans, according to a new analysis from the National Association of Realtors.


More than half of all U.S. homes listed for sale are affordable for households with income of at least $100,000. But nationwide, 35% of white households and only 20% of Black households have incomes greater than $100,000.

“The homeownership rate has been around 50% for all households in the expensive metro markets, such as Los Angeles and San Francisco, and therefore it’s becoming nearly impossible to afford a home, especially for Black households,” says Lawrence Yun, chief economist at NAR.

Some metro areas still remain affordable for Black households in proportion to their income. Cities such as Akron, Dayton, Toledo and Youngstown, Ohio; Baltimore, Maryland; Birmingham, Alabama; Detroit; McAllen, Texas; Memphis, Tennessee; and St. Louis, according to the NAR study.

Pamela Brooks, an evidence technician with the City of Richmond Police Department, has been looking for a home for the past year. The 42-year-old single mother of three boys grew up in public housing and has never owned a home.

She makes $44,000 a year and has been preapproved for a Federal Housing Authority issued loan of $250,000. She spent the past year building her credit and taking courses geared towards first-time buyers.

When she talks to her white colleagues, she says she feels they are much more knowledgeable about homeownership.

“I guess it’s something that their families teach them from generation to generation,” she says. “As far as homeownership, that’s not taught in my community.”


Financial education and access to credit are important steps towards closing the homeownership gap, Zhu says.

“The visibility of the down payment assistance programs and an understanding of what types of programs exist is pretty low in the Black community,” she says. “We should also reexamine how we can qualify more people to borrow and how we measure creditworthiness.”